The genesis of the idea that shapes this book is a small village close to Delhi. In 1963, Stephen Marglin was part of a team of advisers to the Planning Commission and the question that engaged him then was the reluctance of farmers to adopt new farming techniques that promised dramatic increases in production and income. Were these farmers the exception to the logic of homo economicus who is forever seeking to improve his lot? So he went to Dhabi Kalan, a village some 150 miles north of Delhi, to find some answers and it was here that a new world opened up to him. It was in the encounters with Dhabi Kalan that this economics professor discovered the importance of the community and this set him on a quest that has resulted in The Dismal Science: How Thinking Like an Economist Undermines Community.
It was not the village alone that had a profound impact on this Harvard University don. Some years later, when Marglin was a visiting professor at the Indian Statistical Institute, he was struck by the inability of his students, bright as they were, to grasp the concept of the theory of intertemporal consumption choice. It was a totally alien concept to them. It set him thinking about the cultural specificity of economic theory, and was instrumental in turning him into a heretic who has chipped away relentlessly at the dominant ideology that celebrates the market as a device for regulating human interaction.
Mainstream economics limits the community to the nation, a view that Marglin says is not just narrow but ignores the heavy costs imposed on different communities of people who will inevitably be losers even as there will be many winners in a market-driven agenda. To the economist, who focuses on the individual driven by self-interest, the community is invisible and he takes no responsibility for it, leaving the research on them to sociologists, anthropologists and historians. Some changes are evident on the fringes with behavioural economists looking at issues that imply a fairly radical revision of the rational choice framework.
For Marglin though this is not enough. His basic contention is that the foundational assumptions of economics are not eternal truths about human nature but the distillation of complex myths — myths that emerged from cultural changes in Europe and North America over the past 400 years. As such, it has no meaning, no relevance to other cultures.
The core argument of this book is that the apparatus of economics has been shaped by an agenda that is intent on portraying markets as being good for the people rather than being deployed to discover how markets actually work. And market fundamentalism, he is convinced, has a corrosive effect on communities. The example he offers is the North American Free Trade Agreement (Nafta) signed by the US, Canada and Mexico. It is a telling illustration of how the theory of expanding trade and competitive advantage has destroyed communities and laid waste entire towns and their way of life on both sides of the US-Mexican border. If small industrial towns on the American side have been turned into ghost settlements as companies moved their operations to the other side of the border, several million Mexican farm labourers lost their jobs, in “a deliberate strategy to bring the Mexican peasant in the 21st century, kicking and screaming if necessary”. What this has resulted in is the largest tide of illegal immigrants into the US from Mexico. On the impact of Nafta, Marglin is careful to marshal data from other sources lest he should be accused of being selective to feed his thesis.
Marglin’s views are not always easy to digest. You could be put off by his choice of the Amish of Pennsylvania as a model community, especially since a specific instance of community values that he highlights is likely to jar with most readers. You could also disagree with his choice of fire insurance as an example of how social solidarity and reciprocity, the essence of the community, has been undermined by a more efficient market. In the old days, if someone’s barn burned down, the neighbours would have rallied round to raise it in an act of mutual interdependence, he says. But how many people would be willing to trade market efficiency now for the cumbersome process of getting one’s neighbours together?
The Dismal Science is worth the effort for its rich insights into knowledge and information, and its passionate appeal to put experience at the centre of economic practice. Marglin’s sceptical mind and his exposition of the economic methodology prod the reader into a new way of thinking about economics. It is clear that the work of cultural anthropologist Frédérique Apffel-Marglin, to whom he is married, has greatly influenced his thinking. As he admits, her anthropological perspective has been an important counterweight to his own perspective as an economist. It is in many ways a happy meeting of minds.
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THE DISMAL SCIENCE
How Thinking Like an Economist Undermines Community
Stephen A Marglin
Oxford University Press
359 pages; Rs 795